Thoughts about a reported hedge fund (Amaranth) meltdown

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It is being reported on CNBC that Amaranth Advisors has experienced a dramatic turn for the worse after making a massive incorrect bet on natural gas. Apparently this fund, with $9.5 Billion in assets, has seen its YTD gain of 22% erased and now the fund is down 35%YTD, OUCH!! Here are a few of my thoughts on this slow Monday of trading.

– No one is bigger than the market and no one is immune from the potential of financial ruin

– There are no “sure things” in the market

– Everyone deserves what they get out of the market, if you swing for the fences you will often strikeout

– Risk management and position sizing are more important than what you trade

– Bad news comes out at short term turning points (could this lead to a short term turnaround in the price of oil?)

– I thought it was a “hedge” fund?

– Just because they control billions, it does not mean you cannot beat their performance

– The “smart money” doesn’t always do smart things with their money

I’m sure this list could go on and on, feel free to add your comments.